Page:Harvard Law Review Volume 32.djvu/703

INDIRECT ENCROACHMENT ON FEDERAL AUTHORITY 667 "Such an income of a nonresident is taxable not only because it fits in with the theory of the right of all taxation, i. e., protection, but for another reason. The situs of things and choses in action and legal rights rests in many cases upon a legal fiction. The necessity of avoid- ing confusion, inconvenience or injustice arises in some instance, and the law settles upon a so-called situs. Familiar illustrations are: A married woman ordinarily partakes of her husband's nationality and domicile; the law of domicile controls the descent of personalty; and many others to be found in the realm of private international law. These questions arise where there *are conflicting claims of jurisdiction. Their settlement depends often, if not usually, upon broad considera- tions of public policy and justice. One main test in determining the public policy and justice of a situation is to examine the possible or probable effect of a particular holding. If the above view of this tax taken by the court does not prevail, there will result the possibility of avoidance of state income taxes. This latter through the possibility of taking up residence in a state with little or no taxation of that sort. Income taxation is too valuable and important a method of exercising the sovereign power of taxation to risk any diminution through a choice of residence at the hands of the party taxed who at the same time maintains his property and business as before. The public good re- quires its preservation in its entirety." ^°* There can be little doubt that one or the other or both of these views of Judge Stone will prevail to the extent of furnishing suf- ficient justification for state taxation of income from business within its borders, irrespective of the domicil or character of the ultimate recipient of that income.^"^ It is most unlikely that any non- >"8 250 Fed. 877 (1918). '"^ This prophecy is ventured, notwithstanding the dissent of Judge Campbell in Shaffer v. Howard. Judge Campbell relies on the following statement of Mr. Justice Field in State Tax on Foreign-Held Bonds, 15 Wall. (82 U. S.) 300, 319 (1872): "The power of taxation, however vast in its character and searching in its extent, is necessarily limited to subjects within the jurisdiction of the State. These subjects are persons, property, and business. Whatever form taxation may assume, whether as duties, imposts, excises, or licenses, it must relate to one of these subjects. It is not possible to conceive of any other, though as applied to them, the taxation may be exercised in a great variety of ways." On this as a premise. Judge Campbell insists that the Oklahoma income tax on residents is a tax on persons, and the tax on non-residents is either on persons, property or business. As a personal tax it cannot be sustained because there is no jurisdiction over the person of non-residents. As a tax on business or on property, it cannot be sustained because it selects for discrimination the property or the busi- ness of non-residents and thereby denies them the equal protection of the laws and Ae privileges and immunities of citizens of the several states.